In the light of the Khaitans losing control over Eveready, why are so many Indian promoters being forced to let go off their companies which they built over the years?

You are absolutely right and that is a serious problem. In the past, there were the likes of LIC and UTI which would always vote in favour of the existing promoters to prevent hostile takeovers. In last few years, number of promoters have lost control of the businesses that they carefully built from scratch by taking on a lot of risk. I can share with you two very typical cases of Indian promoters losing control of their coveted companies.

One reason is that they tried to bail out their group companies. The first was the case of Zee group wherein promoters had pledged shares of the parent company to bail out infrastructure projects of the group. Very recently, we had the Khaitans losing control of Eveready. They tried to save McNally Bharat which eventually led to the Khaitans ceding control to the Burman family of Dabur. This is a disincentive for entrepreneurs to invest.

This is true of a number of start-ups too. For instance. We have seen the two original founders of Flipkart forced to exit the company when their stake became too small. The PE funds, with little skin in the game, was calling the shots. That is what led to the sale of Flipkart to Wal-Mart. Without getting into merits, Ashneer Grover lost control of Bharat Pe, a company that he built from scratch. This was largely due to the differences with the private equity investors. That needs better defence mechanisms.